By Rob Fawcett, Partner, Bennett Griffin LLP
Are you thinking of retiring and selling your business? Or perhaps you are looking to expand and buy out a competitor? Either way, if you have not done it before, there are numerous traps and pitfalls which can catch you unaware, this is why legal advice in any transaction is essential.
When considering selling or purchasing a business, there are some basic points you must consider. The first is, why do you want to do it and is it right for you? Do not make an impulse decision, ensure that you think it through carefully. I would also recommend speaking to your Accountant for tax advice so as to ensure that the timing is right. Lastly, is your house in order and is your business ready for the change?
You need to make sure you’ve prepared adequately, for example, that your accounts and company books are up to date and any licenses are in place.
Based on my many years of experience in buying and selling businesses, here are some key points and terms that you need to be aware of:
APPORTIONMENT
The purchase price will be the full amount payable by the Buyer to the Seller for the purchase of the Business. However, for taxation purposes, the purchase price will need to be apportioned between the various assets of the Business that are to be transferred to the Buyer (e.g. goodwill, premises, equipment and fixtures and fittings).
As the tax payable by both parties resulting from the transaction will vary depending on how the purchase price is apportioned between these assets we strongly advise that both parties seek the advice of their Accountant at an early stage of the transaction.
